Spotlight Reporting Archives - The Latest on Accounting Tech for SMEs

Financial Modelling – the Next Big Thing in Advisory? #ABExpo 2018

February 8, 2018 by Sholto Macpherson

Lance Rubin, a chartered accountant who spent 20 years in financial services, opened a financial modelling consultancy two years ago under the name Model Citizn. After contracting as a financial modeller for the past two years he is now a part-time CFO for Banjo Loans and Sequel CFO.

Rubin says more powerful financial modelling techniques he learned in investment banking can give more accurate and useful advice to SMEs, a skill he refers to as “visual influencing”.

In this preview of his session with Brad Eisenhuth of The Outperformer at the Accounting Business Expo 2018 (click here to register for free), Rubin explains what is involved in financial modelling and what makes it superior to forecasts in Excel.

Digital First: What is financial modelling?

Lance Rubin: I don’t think a lot of people understand what it is. Many accountants think they know what it is but they definitely haven’t built models in the way that investment bankers build models because they just don’t have the time. You just mock up a spreadsheet, call it a model and away you go.

Cashflow modelling is a form of financial modelling, so is a budget, everyone would understand that. But forecasting the balance sheet, P&L and cashflow together, this is holistic modelling.

Digital First: How is that different to what you would do with Excel or one of the reporting apps?

Rubin: Cashflow is the outcome of movements in P&L and the balance sheet, not the other way around. Most people do their numbers as the cashflow. But an invoice doesn’t go to bank it goes to debtors, unless it’s a cash sale.

But most importantly how do you use the skill of financial modelling to influence decision making. This has really helped in my career. I got my roles at Sequel and Banjo for my financial modelling skills from working in investment banking.

Digital First: How have you used financial modelling in these companies?

Rubin: I discovered that technology can scale that skill – which is effectively what I did when I disrupted my own role. My role at Banjo went from three days a week to three days a month. Not many accountants would do that because they wouldn’t know what to replace it with. I fundamentally changed my brand in terms of what I do.

Digital First: How would you rate the reporting apps in the SME accounting ecosystem for financial modelling?

Rubin: Futrli does some forecasting, so do Calxa, Fathom, Spotlight Reporting, etc. It’s a form of forecasting and budgeting but not modelling. Microsoft Power BI is a great tool for visualisation of data, much better than Excel, but it is not going to help you model a decision. Power BI is about getting insight, not foresight.

This is about the power of having something where you can run an infinite number of scenarios. The Monte Carlo model creates thousands of simulations. The question you want answered is, What are the key drivers and how do you customise that?

Digital First: What do you mean by visual influencing?

Rubin: The skill of financial modelling is to influence. Everyone wants to make decisions. What sort of decisions do you make if you’re going with gut feel? You make bad decisions. The best way is with facts and data and a model. If all else stays the same and you did this, then this would happen.

How long will it take a new hire to be efficient? What revenue will they generate? What’s the return? Are you going to hire them on a small base plus commission and your business earns revenue off the back of that?

Most CFOs don’t have the models or skills to influence the boardroom. Keeping people engaged with a table of numbers is hard. Using images is far more engaging. Visual influence is about taking a numerical conversation into a graphical user interface and user experience.

For more on the trend towards financial modelling check out Lance’s very interesting LinkedIn post.

Lance Rubin is talking to Brad Eisenhuth in “Why financial modelling is the most critical skill for any CFO” at 1.00 pm – 1.30 pm on Thu 22 March 2018 at the Accounting Business Expo, Darling Harbour.

Xero Launches Modular Practice Concept with Xero HQ

September 15, 2017 by Sholto Macpherson

Xero’s extensive app marketplace for small businesses now has a mirror – a curated selection of back-office apps to run accounting firms.

The back-office apps connect to Xero HQ, an interface used by accountants and bookkeepers to manage their Xero client files. Xero HQ was announced at Xerocon 2016 to replace “Green Xero”, an older interface that was based on a simple client list.

The launch at Xerocon this week added the ability for apps to sync data with Xero HQ such as the client list, and client name and email address details from Xero files. The apps will also send notifications to an activity feed in Xero HQ. Individual accountants can customise their feed to show alerts from certain apps as required.

When a user clicks on an alert it will open the relevant app and client file.

Xero describes Xero HQ as “a multi-vendor platform for accountants and bookkeepers to run their entire back office”. The modular approach directly challenges the existing server-based practice management suites used by most conventional accounting firms.

The first nine app partners launched on Xero HQ include, by category:

Data collection

Receipt Bank for more efficient bookkeeping
Hubdoc for automated financial documents

Onboarding

Practice Ignition to assist with client onboarding

Reporting

Fathom to efficiently create forecasting reports
FUTRLI, to provide future insights for a business
Spotlight Reporting, shows how clients are performing in a single view

Compliance

Now Infinity to make corporate and trust compliance woes a thing of the past

File management

Suite Files to bring all client data and files into one place

Marketing

Boma for self-drive marketing

Xero will add more apps to Xero HQ over time. However, Xero will take a much more active role in “picking winners” by tightly vetting all new apps and limiting the number in each category.

Stay Alert

The most interesting part of the Xero HQ apps marketplace is the power of notifications. Xero already was already sending notifications to the activity feed for tasks in Xero files such as making payroll or filing a BAS report.

The expanded list of notifications turns Xero HQ into a control board for upcoming activities or important events. The quality of the notifications varies by app; some look genuinely useful while others could be more noise than signal.

The app notifications can be customised by user or switched off entirely to avoid a deluge of alerts.

Here’s an overview of the notifications by app, according to each software company.

Futrli

Futrli already has a sophisticated notifications engine for customisable events in a Xero user’s chart of accounts. An accountant can select minimum and maximum thresholds for KPIs in Futrli. For example, if the percentage of Gross Profit has dropped or is forecast to drop below a certain amount it will trigger an alert.

Futrli will also send alerts based on three-way scenarios. Futrli could generate an alert in a best-case scenario if the Bank Accounts total is forecast to drop below $10,000 in the next quarter.

These alerts, which are usually sent by email to the whole team or individuals, can be sent to Xero HQ.

Here’s a help guide on how to create predictive alerts in Futrli.

Fathom

Fathom sends an alert to Xero HQ:

When an advisor shares a report with a client. Anyone in the advisory team can click on the alert to view the report in Fathom.
When Fathom automatically creates a scheduled report from a template. Anyone in the advisory team can click on the alert to view the report in Fathom.
When a client comments on a report in Fathom. The advisor can click on the alert to view the comment in Fathom and respond.

Fathom has made a 1-minute video showing how the alerts work.

Spotlight Reporting

Spotlight Reporting sends an alert to Xero HQ:

When an advisor hasn’t imported data for a scheduled report.
To remind an advisor to work on an overdue report.
To remind an advisor to finish preparing a previously started report.
When Spotlight Reporting releases a new industry-specific report template.

Clicking on each alert shows the respective report. Spotlight Reporting has written a blog post and shot a 1-minute video showing how the alerts work.

Practice Ignition

Practice Ignition sends an alert to Xero HQ:

When a proposal has been accepted. Click on the alert to view the proposal.
When a client adds a comment to a proposal. Click on the alert to view the proposal.
When a payment collection fails. Click on the alert to re-schedule the payment.
When a credit card is due to expire. Click on the alert to update the client’s credit card details.

Practice Ignition has written a blog post showing how the alerts work.

SuiteFiles

SuiteFiles sends an alert to Xero HQ:

When a document in SuiteFiles is shared with a colleague for approval. Click on the alert to view the document in SuiteFiles.
When a document is approved. Xero HQ sends the alert to the document’s originator.
When a client signs a document.
If a document has not been signed after seven days.

SuiteFiles has a deep integration with Xero HQ which allows it to perform several useful actions.

When a user creates a new client in Xero HQ it will automatically create a new client folder in SuiteFiles from a template (with subfolders, if desired).
A user can click on a link in a SuiteFiles client folder to open that client’s details in Xero HQ.
A user can set up templates in SuiteFiles with “merge” fields that pull data from Xero HQ to pre-populate Microsoft Office and email templates.

Receipt Bank

Receipt Bank has notifications for users of its standard app and more notifications for its Practice Platform interface.

The standard Receipt Bank app sends an alert to Xero HQ:

When a specific item submitted to Receipt Bank is older than a predefined time period (e.g. a three-month-old invoice or if it is older than the Xero lock date). The user can click on the alert to view the respective item. The “client delay” alert is sent to all Receipt Bank users.
When the number of items waiting in a specific client’s inbox hits 100 items. The user can click on the notification to view the client’s “ready to export” inbox. The “inbox milestone reached” alert is sent to all users.

The Practice Platform interface in Receipt Bank sends an alert to Xero HQ:

When a client’s account has not been worked on for a set period of time (e.g. three months).
When a client responds to a message about an item. Clicking the link shows the messages tab in Receipt Bank for that item.
To show the number of items which have matches with unreconciled bank statements. Clicking the link takes the user to the client’s inbox.
When the outstanding workload reaches a specific threshold (e.g. 10 hours). The alert repeats daily.

HubDoc

HubDoc sends an alert to Xero HQ:

When a document has been processed (i.e. the data has been extracted) and it is ready to be published or archived.
When HubDoc has failed to process a document.
When a processed document has been waiting for a set period of time (eg. two weeks). This is customisable for individual clients or for all clients.

HubDoc has explained how the notifications work in a blog post, help desk article, and an information page for Xero HQ which includes a video on the integration at the bottom of the page.

NowInfinity

NowInfinity sends an alert to Xero HQ:

When a user adds a new entity to Xero HQ and needs to be added under the ASIC record.
When a user adds a new entity to the ASIC record and it needs to be added to Xero HQ.
When the address for an entity is different in Xero HQ and NowInfinity.
When the name of an entity is different in Xero HQ and NowInfinity but has matching ACN or ABN.
When data is missing from the ASIC register such as a date of birth.
When an individual has a different name in Xero HQ and NowInfinity.
When a lodgement deadline is approaching.
When a document has been signed.
When a payment deadline is approaching (for annual statements).
When an Annual Statement has been received and needs to be sent to the client.

BOMA

The BOMA Marketing has only recently hit the market and it hasn’t built any activity feed alerts for Xero HQ yet. It plans to do so in the next month or so.

How Do You Set Up a Dashboard?

February 4, 2015 by Sholto Macpherson

In the second article of series on dashboards (here’s the first) we are going to go through the basics of setting up a data dashboard. Dan Fairbairn from Ocius Digital, a consultancy which sets up dashboards and other apps for businesses, gave a firsthand walkthrough of the steps involved.

There are several dashboard apps out there with different strengths but for this exercise we used Crunchboards because it has a demo company that will show its data in the dashboard. (The demo company is actually from online accounting company Xero, to which Crunchboard connects. Fathom also has a great demo with 10 companies, but the Xero demo can be reset more easily.)

The logic in this walkthrough applies to other dashboards such as Fathom, Spotlight Reporting, Duckboards and Geckoboards. The goal is to define what metrics you want to see and size the display to emphasise the most important numbers.

An accountant assisting clients can set up several dashboards for businesses of different sizes and industries, and reuse them as needed.

Steps to Set Up a Dashboard

Before you set up anything, watch Crunchboard’s introductory video to get a feel for the flavour of the app. Done that? Ok, let’s get underway.

1. Open Boards. Add a new board. We’re going to set up a professional services dashboard first.

Welcome board - Crunchboard — Welcome board – click to expand.

2. Go to Board. Always check the name of the dashboard and that you’re editing the board you think you are. It’s easy to get mixed up with multiple dashboards and you can start making changes on the wrong board.

A warning about opening up different boards with tabs in your browser: if you click to another tab with a different dashboard, the original tab is going to update to the new dashboard.

Go To Board - Crunchboards — Go to board – Click to expand.

3. Click Edit. Add a card. Choose the Report. Let’s pick a P&L, the lifeblood of a business. Name the card and call it Profit & Loss.

Naming is important – you want to know instantly what the numbers are you’re looking at later. Make sure that you’re naming it correctly and wisely.

Add new card - Crunchboards — Add card – Click to expand.

4. Resize the card. If it’s the most important thing in your business, stretch it across a large part of the screen. Make it something you can’t miss.

Resize card - Crunchboards — Resize card – click to expand.

5. Select the accounting software program you want to connect to. Select actual or forecast data. Show actual before forecast.

6. Choose the chart. Large column charts waste a lot of space; you don’t want big gaps between columns because it makes it harder to compare. We’re going to choose Spline.

Then select date range. Make it per week, not per month, and going back for the past four months.

Choose chart - Crunchboards — Choose chart – click to expand.

7. Add accounts. Click on Reports, add Cost of Sales and Expenses. Only add essential accounts – you don’t want to overwhelm the dashboard with data.

Add Accounts - Crunchboards — Add Accounts – click to expand.

8. Add a formula. Find a formula of use, eg. Net Income or Gross Profit, and add it to the card. You can add or vary a formula such as net income per employee. Consider adding things from other sources. Eg. importing from Excel.

Add formula - Crunchboards — Add formula – click to expand.

9. Click on Display. Deselect individual accounts and only include account categories, formulas.

Select view - Crunchboards — Select view – click to expand.

10. Add another card. Select Profit & Loss, but this time set the period to 12 months. You should set the period to whatever makes sense for your business. If you’re turning over food you should look at it daily or weekly. Find the spikes.

Add 12 month view - Crunchboards — Add 12 month view – click to expand.

11. Compare cards. Watch your weekly performance over three months and compare it to the 12-month graph. Do you know why they’re similar or different?

Compare cards - Crunchboards — Compare cards – click to expand.

12. Go into Advanced on Card. Deselect % growth. This reduces the width of the report.

Simplify board - Crunchboards — Simplify board – click to expand.

13. Add forecast. Go through the same procedure of adding another card but this time select Forecast instead of Actual. Now you have a simple numbers summary of your performance to date.

Telling a story several ways can make it easier to understand what’s happening in the business.

Add forecast - Crunchboards — Add forecast – click to expand.

And you’re done. Now you have a basic dashboard to give you a quick glimpse of the financial health of your business.

Some general tips.

Make sure you change one thing at a time. If you change the colour, scale and size all at once then things can get confusing. Colours that are similar will blur; choose higher contrast.
Reduce unnecessary numbers. Do you need to have variance and percentage growth? The more clutter on the screen, the harder it is to read. Use consistent colour all the way through, and highlight only the points of emphasis. If there’s a week when profit is low you can spot it and examine.
Reduce scrolling. Try to have widgets sized so you don’t have to scroll sideways to read them.

The key to a successful dashboard is one that gives you information about your business that you can act upon. What questions does the chart raise?

Too many businesses spend a lot of time getting the data and doing the report, Fairbairn says. “By the time you’re finished you can’t get the insights out of the data.”

Don’t be shy to create several dashboards. Group all your sales metrics in one dashboard and all your operations in another. Monitor monthly performance and compare to the quarter and to the year.

Once you have your dashboards in place you will have a much clearer picture of the health of your business.

Next: We look at setting up a dashboard for an accounting practice.

Spotlight Reporting Raises $2.7m From MYOB founder, Xero Directors

June 3, 2014 by Sholto Macpherson

Business intelligence tool Spotlight Reporting has raised $2.7 million (NZ$3 million) from several investors including MYOB co-founder and Xero director Craig Winkler. Xero’s chairman Sam Knowles and another director, Graham Shaw, also contributed to the round.

“This capital raise allows us to continue building a great team, to fast-track product development and expand our physical presence in Australia, the UK and US in coming months,” Spotlight Reporting CEO Richard Francis said in a press release.

Spotlight Reporting began as a tool for producing PDF reports from data in Xero for accountants, bookkeepers, franchises, small businesses and not-for-profits. It has expanded its range into a KPI dashboard, franchise benchmarking (up to 500 Xero organisations) and cashflow forecasting.

The company has a close relationship with Xero – Xero acquired sister product Spotlight Workpapers and added it to its Practice Studio practice management suite for accounting firms. Francis worked briefly as general manager of Workpapers at Xero post acquisition.

Spotlight Reporting has offices in New Zealand, Australia and is opening its first UK office in London.

Kiwi Cloud Apps Set Up Melbourne Base

June 11, 2013 by Sholto Macpherson

Three cloud software companies from New Zealand have set up a joint base in Melbourne for their Australian expansion.

Point-of-sale program Vend, job scheduling app GeoOp and accounting tool suite Spotlight Reporting have taken over a former gallery in Richmond around the corner from cloud accounting company Xero, also from New Zealand.

The three programs were among the most established of Xero’s “add-on” apps and had been temporarily sharing Xero’s offices.
“What’s awesome for the add-ons is that they can come over here and literally be up the road from the mothership” Xero, Richard Francis, CEO of Spotlight Reporting said.

Vend, which has received several million dollars in venture capital, held the lease for the gallery and the other two apps were sharing offices as they had done with Xero, Francis said.

“We just see Australia as such a pivotal market now. It’s a really dynamic time to be riding the coattails of Xero and some of these larger, better funded apps,” Francis said.

The Richmond hub included four staff for Vend and GeoOp and one for Spotlight. However, Vend was growing rapidly and the office arrangements could change, said Fallon Savery, Vend’s country manager for Australia. The PoS vendor was looking for two sales consultants, a business development manager and a “customer success” manager who set up new customers.

“The growth is so huge we never know how big we are going to get,” Savery said.

In the business world of cloud software, a collective approach to office sharing has become quite common. StartNest, shared offices for cloud software startup in Crows Nest, Sydney, was set up last year by receipt and document scanning service Shoeboxed. The co-working space had 30 desks for fledgling businesses developing cloud software.

“Co-working spaces will be prime breeding grounds for cloud apps,” said Jono Herrman, Shoeboxed Australia’schairman. “We’re all about promoting the SaaS industry and one way we could do that is opening this in North Sydney,” he said.